How to find overbought forex price using Fibonacci

Sell high and buy low is one of the most popular instructions that characterise the market.In the same vein, forex traders keep asking that at what point do we have oversold  in an uptrend and overbought price in a downtrend? How to detect forex market trend.
The first thing to look out for on the chart of  any currency pair  is the most present trend which is also the net market direction over a reasonable quantity of time.Knowing the prevailing direction of the market prices is not a big deal for any trained forex trader.It is already  an established fact that there is greater tendency of success whenone is trading in phase with the trend.If you are still finding it hard to identify the main market trend at any time then read more on forex trend. It will surely help you a great deal. How to trade in the direction of the marrket trend

While many traders know how to identify where the market prices may be going at a particular time, they still struggle at knowing the salient price to sell in a downtrend in order to maximise their profits and minimise possible losses.Forex articles: How to increase your forex profits significantly and consistently

 It is very easy and profitable to sell in a downtrend. All there is to it is to identify if the trend on daily or any other time frame is bearish. Then wait for price to move mildly upwards ( retracement) to atleast  Fibonacci level 38.2% or  61.8% .We can say that a pair is overbought when it stops going down and starts going up and gets to either 38.2% or 61.8% in a confirmed downtend. This is the type of set-ups that enable traders to sell high in a downtrend.The level 38.2% or 61.8% becomes the decision zone and any selling signal generated around here gives huge profit potential. How To Use Fibonacci Tools

The diagram above shows EURUSD on a daily chart.It is clear from the diagram that the pair is in a downtrend. However, the price stopped going down at a point and started going up until it got to Fibo 38.2%. This level posed a strong resistance to the rise  as seen in the yellow rectangle above.I think you can see that we had a top around the 38.2 level and price resumed the fall again with greater momentum.

At times, my take profit is 100 pips and my trailing stop is 40 pips. My favourtite currency pairs are EURUSD, USDCAD, GBPUSD, USDCHF, USDJPY and AUDUSD. Money management is a personal policy and I ususally risk 1% or 2% per trade.You may please send your email to me or leave comments. I am the author of this blog. I can write for you on your forex blog too for a token.